Dow up 90, S&P 500 just 21 shy of record level

Stocks ended higher Tuesday as Wall Street built on the previous day's rally that sent the Dow barreling back into the black for the year.

Traders focused on more earnings reports and corporate deals as they debate whether Monday's stock market surge is the start of a lasting year-end rally.

The Dow finished up about 89 points, or 0.5%, to 17,918. That comes on top of 165-point gain on the first day of trading in November, which historically kicks off the most bullish six-month period for stocks.

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Similarly, the Standard & Poor's 500 stock index, which has wiped out all but 1.3% of its 12.4% dive during the recent market correction, was up 0.3%, and the Nasdaq composite gained 0.4%.

The broad S&P 500 is now just 21 points shy of its all-time closing high of 2130.82.

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Stocks, which looked on the cusp of a major breakdown this summer when the market suffered its first correction, or 10% drop, in four years, has rebounded sharply this fall. Driving the rebound has been a mix of better-than-expected corporate earnings, the Federal Reserve holding off on interest rate hikes and signs that China's economy, while slowing, is not collapsing.

The rally off the August lows has improved the performance picture of the U.S. stock market. In addition to the Dow climbing into positive territory for the first time since late July and the S&P 500 nearly erasing all of its summer losses, both tech and small-company shares are also on the move.

Heading into today's trading session the Nasdaq is the best-performing major U.S. stock index, with a gain of 8.3%. And the small-cap Russell 2000 index on Monday finally climbed out of official correction territory, and is now down 8.5% from its June peak.

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On the earnings front, insurer AIG, which activist investor Carl Icahn argues should split into three separate parts, fell short of both earnings expectations. Shares of (AIG) were down 4% to $60.99. Shares of cereal maker Kellogg (K) fell 3% to $68.38 after it reported quarterly sales that fell short of analyst estimates.

Government bond prices were down, with the yield, which moves in the opposite direction, on the 10-year Treasury note up to 2.22% for the first time since Sept. 25 and up sharply from its recent low of 1.98% on Oct. 14.

Stocks were mixed around the globe. The Nikkei 225 in Japan fell 2.1% and the Shanghai composite in mainland China dipped 0.3%. Hong Kong's Hang Seng index jumped 0.9%.

European shares were mixed, with Germany's DAX was flat and the CAC 40 in Paris was up 0.4%.

Adam Shell on Twitter: @adamshell.